Monthly Digest: China Natural rubber market in November (part 1)

The high inventory again become the focus Hujiao continuing shock pattern

1. The November natural rubber Review of Trends

November Hujiao trend slightly weaker than expected, showing the inverted N-type movements in early the first week of the world is enveloped in the U.S. presidential election, China’s 18 large hurricanes in the U.S. and many other major events, but also makes the financial market volatility, while Hujiao are showing the significant downturn in the shock, fell to a low of 23,423 yuan to 25,000 yuan from the high point to be supported after Japanese rubber shock rebound in Japan’s zero interest rate easing and China Shouchu expected, driven Hujiao passive with the rise, but on blocked down again rushed to above 24,500 yuan, the end of Shouchu message dilute inventory pressure appeared, lead to final Hujiao index closed at 23,899 yuan, down 3.21% monthly.

Day glue November performance is slightly stronger relative to Hujiao weakness in early continuation of the downtrend of the last month, but fell to 240 yen support, strong after more than a week of efforts to unilateral rise once back to the high of 260 yen, while taking the last week of a slight, but the Japanese rubber index eventually closed at 255.7 yen, the monthly rose slightly to 1.19%.

Japanese Rubber Futures Rally On Shanghai Gains

Analysis November inside and outside the formation of the differentiation of the reason is mainly from the easing in Japan formed boost during the yen depreciation rate of 3.4%, Japan’s stock market rose by 5.8%, a significant leading role on plastic, while the domestic high inventory fundamentals are still weak, and the rumors of the car to the countryside downstream stimulate policy and natural rubber Shouchu of policy neither clear, while the domestic stock market by 4.29% decline to a certain drag role, therefore, differences in domestic and foreign policy factors led to the trend of differentiation.

Figure 1: Hujiao index Japanese K Line Chart (Unit: yuan / ton)

Figure 2: the day plastic index Japanese K Line Graph (Unit: yen / ton)

Source: Man Huazhong permit Futures Research Department

2. The November natural rubber perspectives REVIEW

Although early sell into the market trend once destroyed, but we still insist that the 23,500-point support near strong ,23500-24000 area will Pupil critical areas of contention, supported by the rebound in this area, indeed, but The high inventory worries at the end of the market fell again, and re-test the support of 23,500 yuan validity. Early Monthly Digest that the labeling law is not just earlier this month, the market is expected to not pressure upstream of the expected performance from nearly a month see, Hujiao, presented 23500-25000 yuan range bound pattern, direction uncertain.

3. The December natural rubber influencing factors

3.1. High inventory once again become the focus

The beginning of the end of the third quarter of the fourth quarter, the focus of attention of the natural rubber market focus on the cut exports and purchasing and storage policy in Southeast Asia, so the pressure to dilute the market for natural rubber stocks, but as the policy becomes clearer policy implications force dilute the same time, the focus of the market is once again back on the stock, resulting in the mid to late 11 pressure down trend.

ANRPC report shows that in October, producing country inventory total 100 million tons, far above the level of the same period last year.

Pressure largest inventory data from China Qingdao Free Trade Zone, the data show, since bottoming out in August last year to 87,000 tons, the inventory situation presented to higher volatility, reached a high of 250,000 tons in the beginning of this year, despite somewhat in Q2 of this year fall, but only down to the steady rise of 200,000 tons, as of November 30, Qingdao Free Trade Zone inventories reached 290,500 tons, 16% higher than the same period last year, natural rubber was 193,000 tons, hit a new high in recent years, inventory The backlog has also led to the weak stock market performance.

Shanghai Futures Exchange, the recent stock transaction, since mid-July to the inventory is completed, to gradually rise from 19,000 tons, but the early days of the price difference also showed some upside down or futures price is no obvious advantage, therefore, the futures market the stocks rebounded slower, less than 50,000 tons in October, less than 60,000 tons in November, but November futures market stocks rebounded significantly accelerated, especially in the end of the week an increase of 23,650 tons, making the last period of the inventory directly jump to 90,000 tons above the level of less than 30,000 tons compared to the same period last year exceeded 200% change from the delivery of library, Hainan and Yunnan area facing stop cutting, so almost no rise in inventories, while Masukura mainly in Qingdao pin area, does not rule out early on the price difference from negative to positive, but there is also some arbitrage opportunities, or futures price is higher than the spot price, some spot goods difficult shot selection to the delivery of the futures market may last issue stock pushed higher once again increased the market pressure.

Comprehensive the three inventory data, showing the current pressure can not be ignored, resulting in high inventory mainly from three aspects, the first is to the southeast of the major producing areas of weather this year, basically not much abnormal yield favorable weather environment to maintain a steady growth, while 3,4 quarter is also the peak of production, and therefore lead to a supply of concentrated release; followed by a continuation of the global financial crisis dragged down the improvement in demand, weak demand led to the inventory more slowly; addition is part the traders appear larger loss situation forced to hoard goods; combination of these three factors, causing the stock to rise, in fact, from the calendar year performance, the fourth quarter and the first quarter of the inventory are presented normalized higher this year only in the supply and under the double impact of the demand, inventory accumulation is more obvious; November, domestic gradually cut into the stop, the supply pressure slightly easing to wait until February next year, after Southeast Asia gradually into the off cycle reduction to the inventory will be accelerated Therefore, it is expected that a quarter of high inventory status will continue.

Figure 3: natural rubber of the price differentials